Self-employed retirement plans Nashville, TN. The freedom of being your own boss in Nashville, TN is one of the best aspects of working for yourself. Even so, this flexibility sometimes brings with certain challenges, notably regarding planning for retirement, because you don't have the benefit of retirement programs through an employer. Only 13% of self-employed individuals have a workplace retirement plan, yet countless would be better off understanding their retirement options. In addition to enjoying a financially stable retirement, partnering with a financial advisor in Nashville, TN to create your self-employed retirement plan can provide significant tax advantages that allow both you and your business to thrive.
Few Nashville, TN wealth management and retirement planning firms truly grasp the challenges faced by entrepreneurs better than Correct Capital. Our company’s founder grew up with a father who was a small business owner himself (read more of our story here), and Correct Capital have a rich history of supporting entrepreneurs with their retirement planning needs. We understand that your goals for your business and retirement aren’t limited to basic numbers, and we work tirelessly to provide personalized solutions that reflect your objectives. Read on to discover about your self-employed retirement plan options in Nashville, TN, or call Correct Capital at 877-930-401k or contact us online to consult with a entrepreneurial financial advisor in Nashville, TN today.
Why Nashville, TN Self-Employed Individuals Should Have a Retirement Plan
Retirement plans for self-employed individuals not only prepare you for the future, they also deliver real benefits today. Offering flexibility in contributions to substantial tax savings, partnering with a financial advisor in Nashville, TN helps you create your retirement plan to suit your individual circumstances.
Flexibility That Fits Your Income
When your earnings vary annually, a plan like a SEP IRA or Solo 401(k) offers the option to adjust how much you save:
- Customizable Contributions: Set aside more during high-income years and cut back when your earnings dip, ensuring your plan works with your financial situation.
- Roth Options: Opting for a Roth Solo 401(k) lets you pay taxes on contributions now, so you can withdraw without tax penalties in the future—a smart decision if you anticipate your tax rate will increase in the future.
Save Money on Taxes
Plans designed for the self-employed deliver significant tax benefits:
- Tax-Deductible Contributions: Contributions to a Solo 401(k) shrink your tax liability, helping you keep more of your income.
- Tax-Deferred Growth: You won't pay taxes on investment growth until you withdraw it, providing your money more time to grow.
- State-Specific Incentives: Based on your location, you could qualify for additional credits as a self-employed individual. These local incentives make these plans even more advantageous.
- Retirement Savings Contributions Credit (Saver’s Credit): Eligible individuals can claim a tax credit of up to 50% of the first $2,000 they contribute a retirement plan, helping to lower your tax bill even more.
Protect Your Savings With Smart Investments
Building a secure retirement requires more than how much you save—it’s also determined by your investment strategy:
- Diversified Portfolios: Distributing your investments across varied stocks, bonds, and other assets is a smart way to minimize exposure to risk while helping to grow your retirement fund.
- Emergency Back-Up: Supplementing your retirement savings with a financial buffer for your business helps you avoid dipping into savings during tough times and incurring penalties.
Plan for the Future of Your Nashville, TN Business
Preparing for retirement can assist you plan ahead for what’s next with your Nashville, TN business:
- Selling Your Business: For those considering a sale, plans like SEP IRAs or Solo 401(k)s stay in your name and won’t be included in the sale. These savings ensure the steady income you’ll need in the future. Remember that while selling your business results in a capital gain, retirement plan contributions are subject to yearly maximums (e.g., as much as $7,000 for IRAs or as much as $70,000 for Solo 401(k)s, factoring in catch-up contributions, depending on plan details).
- Minimizing Taxes: Using retirement contributions wisely can reduce the taxes you are required to pay when you transfer your business.
- Succession Planning: For those winding down or handing over their business, your retirement savings provide financial security as you make this shift. You can also seek advice from a financial advisor with expertise in succession and retirement planning to reduce taxes during the sale.
With the proper savings strategy, you manage your financial future, cut down your tax obligations, and build a secure foundation for both your retirement and your business goals.
Why Start a Self-Employed Retirement Plan in Nashville, TN Now?
Time remains one of the most crucial resources for building your retirement fund. Getting a head start not only lets you accumulate a bigger financial cushion but also lowers the pressure of playing catch-up as you get older. This is why it makes sense to begin today:
The Cost of Waiting
Putting off saving for retirement may cause a substantial impact on the total you’ll have when you stop working. The primary reason is compound interest—the financial principle where your investments earn returns, and those returns, in turn, earn even more returns. The longer your money has to grow, the larger the effect of compounding.
Example: Two individuals, Alex and Taylor are both self-employed professionals. Both of them want to save $500,000 for retirement by age 65:
- Alex starts saving $5,000 annually at age 30.
- Taylor delays savings until age 40 but saves $7,500 annually to catch up.
By age 65, assuming 7% annual return:
- Alex contributes $180,000 and ends up with $691,184.39*.
- Taylor puts in $195,500 but only ends up with $474,367.78*.
How Early Contributions Grow
Even modest contributions made consistently can lead to impressive growth. Here’s a simple scenario showing the effect of compounding:
- Starting at age 25: By investing $200 per month in a retirement plan with an expected yearly growth rate of 7%, you’ll end up with $497,303.29* by age 65.
- Starting at age 35: Saving the same $200 per month would result in only $235,412.97* by age 65—a difference of over $260,000, simply due to a 10-year delay.
The earlier you begin, the less effort required each year to meet your retirement goals.
*The figures provided in this example are estimates calculated using NerdWallet’s Compound Interest Calculator, with the assumption of a 7% annual return. The contributions were calculated by multiplying the annual deposit amount by the total number of years contributions were made. The scenarios provided are meant to provide general guidance and do not guarantee future performance. Your individual results may differ due to factors such as market conditions, fees, and your unique situation. Always consult a financial advisor for guidance tailored to your needs.
Take Control of Your Financial Future
For self-employed individuals in Nashville, TN, it might seem easier to focus more on reinvesting in your business instead of saving for retirement. That said, starting a plan now gives you the chance to:
- Leverage tax-free future growth or tax-free withdrawals later on.
- Enjoy flexible contributions that align with your earnings.
- Build a long-term safety measure that provides security, no matter how your business develops.
The sooner you start, the less you’ll be required to worry about playing catch-up later in life. Saving for retirement now means managing your financial future and allowing yourself the ability to concentrate on your dreams—both for your golden years and your Nashville, TN business.
Types of Self-Employed Retirement Plans
A variety of retirement savings options open for self-employed individuals in Nashville, TN, each with its own pros and cons. A financial advisor is available to help you understand the pros and cons of each option and choose the one most suitable for your unique situation. Generally speaking, your self-employed retirement plan options in Nashville, TN include:
Traditional or Roth IRA
Plan Overview: IRAs, or Individual Retirement Accounts, are retirement savings vehicles that offer distinct tax benefits. In a standard IRA, you can usually deduct your contributions from taxable income, and investment earnings grow tax-deferred, but withdrawals in retirement are subject to income tax. In contrast, with Roth IRAs, you contribute from post-tax earnings, but eligible distributions during retirement, including earnings, are tax-free. In both types of accounts, withdrawals come without penalties if you are at least 59½.
Eligibility: Unlike plans linked to your job, IRAs, including traditional and Roth options are available to anyone with taxable earnings.
Contribution Limits: For 2025, annual contribution limits for IRAs are capped at $7,000, or $8,000 if you're 50 or older.
Simplified Employee Pension Plan (SEP IRA)
Plan Overview: SEP IRAs is a retirement plan that enables entrepreneurs to contribute a percentage of their net earnings. Contributions must come from an employer, so, as a sole proprietor, you (the employee) would not be able to contribute above the 25% you (the employer) allocate. If you have employees, it's required to contribute the same amount for them as you do for yourself. You may choose to contribute a set monetary value or a percentage of wages to employee accounts. SEP IRAs is a good option for entrepreneurs facing cycles of high revenue and low revenue. In contrast to some alternatives, SEP IRAs don’t have costly startup or administrative fees.
SEPs operate like conventional IRAs, where you contribute pre-tax dollars and money withdrawn is subject to income tax.
Eligibility: Employers of any type, including self-employed individuals can set up a SEP.
Contribution Limits: Contribution limits for employees in a SEP IRA are capped at the lower of:
- 25% of compensation, or
- $70,000 for 2025
If you’re self-employed, the contribution you can make is based on a special calculation.
Solo 401(k)
Plan Overview: A Solo 401(k) plan, sometimes referred to as an Individual 401(k) or one-participant 401(k) plan, is a savings option for the self-employed designed for companies that have no employees or where the only employee is a spouse. Solo 401(k)s are similar to traditional employer-managed 401(k) plans, and enable contributions as both an employer and an employee with pre-tax money. This offers more savings than SEPs or IRAs; however, the extra savings options often come with more limited investment options. With this type of plan, you can make either traditional or Roth deferrals, which share the same tax benefits as their IRA contribution counterparts.
Eligibility: Only business owners and their spouses may establish and contribute to a solo 401(k).
Contribution Limits: For self-employed individuals with a solo 401(k) plan, you can make two types of contributions:
- Elective deferrals (as an employee) of up to 100% of your self-employment income, subject to the annual contribution limit. The contribution limits for 2025 include $23,500, or $31,000 if you're over 50, or $34,750 if you attain age 60-63 in 2025.
- Contributions as an employer (as an employer) must not surpass 25% of your adjusted self-employment income, which is your net profit minus half of your self-employment tax and the elective deferrals you made.
Total contributions are capped at $70,000, or $77,500 for individuals aged 50+ (for 2025), $81,250 for individuals turning 60-63 in 2025.
Individual Defined Benefit Plan
Plan Overview: A defined benefit plan represents a type of retirement plan that guarantees a set amount to business owners upon retirement. Unlike defined contribution plans mentioned above, investment returns don’t affect the payout, but allows self-employed individuals to know the precise amount they'll receive in retirement. This option is best suited for wealthier professionals who aim to accumulate a significant sum for retirement and can commit to making sizeable contributions. Contributions grow tax-free until withdrawal, and withdrawals incur taxes as income upon retirement.
Eligibility: Self-employed professionals managing a one-person company or with less than five employees can open an individual defined benefit plan, but it's generally recommended for individuals aged 50+ who generate a minimum of $250,000 yearly. Generally, good candidates for defined benefit plans are:
- Entrepreneurs who want to invest more than $70,000 (or $77,500 for individuals 50 and older)
- Organizations that already put in 3-4% with plans to contribute more
- Companies that have demonstrated consistent profit patterns
- Entrepreneurs over age 40 who desire to "catch up" or boost savings within a short timeframe
Contribution Limits: The cap on contributions requires calculation from an actuary determined by your income, age, and retirement goals. Limits on contributions are updated yearly.
The Importance of a Financial Advisor in Nashville, TN for Your Self-Employed Retirement Plan
Working with a financial advisor in Nashville, TN specialized in self-employed retirement plans is an invaluable resource for entrepreneurs. They offer the knowledge to assist understand the intricacies of saving for retirement and craft a tailored strategy that reflects your aspirations. A financial advisor in Nashville, TN will assess where you stand financially, determine how much risk you’re comfortable with, and guide you in choosing wisely about saving and investing for retirement. Part of what we do for you features:
- Guide you in choosing a plan that aligns with your objectives and circumstances
- Further adapt the plan to your needs even further
- Adopt a written plan as required by IRS rules
- Organize a trust plan to manage your assets
- Help you understand the plan's terms
- Review and modify your plan when necessary
- Provide ongoing education and advice to help you navigate your retirement journey
- Maximize what you receive in retirement by optimizing your social security benefits
Self-Employed Retirement Plans in Nashville, TN: Correct Capital's Process
Entrepreneurs in Nashville, TN who aren’t equipped with the time or understanding to handle their self-employed retirement plan on their own can become overwhelmed by their options. With Correct Capital, our Nashville, TN financial advisors manage the bulk of your savings plan setup for you, working to make meeting your financial objectives as hassle-free as possible for you. We can help you get set up your self-employed retirement plan in a quick, four-step process:
- Schedule a Call: In just 20 minutes, a member of our advisor team can determine if we're suited to your needs for you and your business. This short conversation lets us learn about your needs with no pressure or major time investment on your part.
- Gather Information: Once we mutually decide to continue, we'll ask for information, including your employee count, your existing financial picture, and your future objectives. This allows us to put together a tailored approach suited specifically for your needs.
- Review Your Plan: Once we've developed a plan using the information you provide, we'll sit down with you and review your plan step by step to help you fully grasp it and show how it aligns with your goals.
- Implementation and Monitoring: After we agree on your plan, we'll put everything in place so you can begin contributing. Over the course of our partnership, we'll check in and monitor your plan to keep it tailored to your evolving circumstances.
Our Nashville, TN financial advisors and retirement plan consultants act as fiduciary advisors, who are obligated to they are committed by law and ethics to act in your best interest.
Other financial advisory services we offer in Nashville, TN include:
- Financial Planning for Business Owners
- Comprehensive Financial Planning
- Retirement Income Planning
- Investment Planning
- Retirement Financial Planning
- Independent Financial Advisor
- Roth Conversion
- Investment Management
- 401(k) Audit
- High-Net-Worth Wealth Management
Call Correct Capital for Your Self-Employed Retirement Plan in Nashville, TN
Your business isn't "just a business" to you, and your Nashville, TN financial advisors must deliver more than basic financial recommendations. With Correct Capital, we focus on building a relationship with our clients and their businesses to deliver customized self-employed retirement plans. To every client in Nashville, TN, we provide our I.O.U. promise: everything we recommend will be independent, objective, and unbiased. To get started on your self-employment retirement plan, contact Correct Capital now at 877-930-401k or contact us online.
